Altcoin Plummets Over 98% Following Allegations of Rug Pull in Ecosystem

The Scroll ecosystem is currently facing significant turmoil following allegations of a rug pull involving Essence Finance, a stablecoin initiative within the network.

The stablecoin CHI, developed by Essence Finance, plummeted by over 98% within 24 hours, dropping to $0.077 amid fears that more than $20 million in collateral had been misappropriated.

The last update from the project occurred on September 11, heightening skepticism among stakeholders. Previously, an audit report related to Essence Finance was connected to the FEI Protocol V2 and is now under scrutiny due to these troubling events.

This drastic decline in CHI’s value, coupled with the apparent loss of substantial collateral, has left investors unsettled. The incident raises alarm bells about security vulnerabilities in decentralized finance (DeFi) as layer-2 networks like Scroll continue to evolve rapidly.

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In the same week, Scroll, an Ethereum layer-2 network, launched its eagerly awaited SCR token through an airdrop. While this event generated excitement, responses from recipients were mixed. According to a recent blog post, Scroll allocated 5.5% of its total SCR supply—55 million out of a planned 1 billion tokens—to early supporters and users.

The token distribution involved 40 million SCR allocated to on-chain participants who accrued 200 or more Scroll Marks, which are points given for network engagement. An additional 1% of the supply was evenly distributed among eligible wallets, while 0.5% was set aside as bonuses for users who fulfilled specific criteria.

Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.